The Uganda shilling held its ground against the dollar during the week ending 4th October 2019, trading slightly stronger compared to the previous week.
The unit was supported mainly by commodity in flows amid sagging demand from the major market players.
Trading was in the range of 3675/3685. In the money market, liquidity was tight, this prompted the Central Bank to inject liquidity via a reverse repo.
In fixed income market, BOU reopened a 3 year and 15 year bonds with a total of 270 billion on offer. The Yield came out at 14.750% and 15.550% with coupons for preset at 11% and 14.250%. Both tenors were undersubscribed with bid to cover ratios of 0.903 and 0.802% respectively.
In the regional currency markets, the Kenya shilling traded stable and was expected to hold at the current levels supported by inflows from diaspora remittances that evened out demand from the energy sector. Trading was in the range of 103.80/104.
In the global markets, the US dollar fell to a two week low against the majors as investors fretted that weakened in both US manufacturing and services sector could lead to a slowdown in the world’s largest economy.
Expectations that the US economy would continue to outperform other major economies and put pressure on the Federal Reserve to slow its interest cutting cycle were dampened following the real ease of the week data.
“Outlook for the Uganda shilling indicate range bound trading with no significant movements expected in a fairly square market,” says Stephen Kaboyo, an analyst and Managing Director at Alpha Capital Partners.
